Tommy runs a take-out pizza outlet called Healthy Pizza, which is located in a strip mall where there is a lot of parking available. Tommy sells only one type of pizza - a Loaded Vegetarian Pizza. The monthly fixed costs related to making and selling this pizza are: advertising $500, space and machine rental $1500; monthly salary and other costs are also fixed at $2000. The variable costs involved in making and selling each pizza is $4 per pizza, regardless of the monthly quantity produced or sold. Tommy directly competes with a children's pizza place, a meat lover's pizza parlour, as well as other takeout restaurants all located within a three-block radius. Based on past experience, Tommy estimates the monthly demand for his Loaded Vegetarian Pizza as follows, depending on the pizza price. Tommy's Pizza: Costs and Revenues MR Price per Pizza ($) Quantity Sold TR (ATR/AQ) MC 18 3200 57600 17 3600 61200 16 4000 64000 15 4400 66000 14 4800 67200 What is the profit maximizing quantity of output? What is the profit maximizing price per pizza? $

Tommy runs a take-out pizza outlet called Healthy Pizza, which is located in a strip mall where there is a lot of parking available. Tommy sells only one type of pizza - a Loaded Vegetarian Pizza. The monthly fixed costs related to making and selling this pizza are: advertising $500, space and machine rental $1500; monthly salary and other costs are also fixed at $2000. The variable costs involved in making and selling each pizza is $4 per pizza, regardless of the monthly quantity produced or sold. Tommy directly competes with a children's pizza place, a meat lover's pizza parlour, as well as other takeout restaurants all located within a three-block radius. Based on past experience, Tommy estimates the monthly demand for his Loaded Vegetarian Pizza as follows, depending on the pizza price. Tommy's Pizza: Costs and Revenues MR Price per Pizza ($) Quantity Sold TR (ATR/AQ) MC 18 3200 57600 17 3600 61200 16 4000 64000 15 4400 66000 14 4800 67200 What is the profit maximizing quantity of output? What is the profit maximizing price per pizza? $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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